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A Theory of North-South Trade and Globalization

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  • Paul Segerstrom
  • Elias Dinopoulos

Abstract

This paper develops a dynamic general equilibrium model of North-South trade. Northern firms devote resources to innovative R&D to discover higher quality products and Southern firms devote resources to imitative R&D to copy state-of-the-art quality products. Both innovation and imitation rates are endogenously determined as well as the degree of wage inequality between Northern and Southern workers. The steady-state effects of globalization and stronger protection of intellectual property are analyzed

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Bibliographic Info

Paper provided by Society for Economic Dynamics in its series 2004 Meeting Papers with number 30.

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Date of creation: 2004
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Handle: RePEc:red:sed004:30

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Postal: Society for Economic Dynamics Christian Zimmermann Economic Research Federal Reserve Bank of St. Louis PO Box 442 St. Louis MO 63166-0442 USA
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Web page: http://www.EconomicDynamics.org/society.htm
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Keywords: Economic Growth; North-South Trade; Globalization;

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References

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  1. Elias Dinopoulos & Peter Thompson, 1999. "Scale effects in Schumpeterian models of economic growth," Journal of Evolutionary Economics, Springer, Springer, vol. 9(2), pages 157-185.
  2. Jones, Charles I, 1995. "Time Series Tests of Endogenous Growth Models," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 110(2), pages 495-525, May.
  3. James E. Anderson & Eric van Wincoop, 2004. "Trade Costs," NBER Working Papers 10480, National Bureau of Economic Research, Inc.
  4. Jeffrey D. Sachs & Andrew Warner, 1995. "Economic Reform and the Process of Global Integration," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1, 25th A), pages 1-118.
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  6. Jones, Charles I, 1995. "R&D-Based Models of Economic Growth," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 103(4), pages 759-84, August.
  7. Elhanan Helpman, 1992. "Innovation, Imitation, and Intellectual Property Rights," NBER Working Papers 4081, National Bureau of Economic Research, Inc.
  8. Dinopoulos, Elias & Segerstrom, Paul, 1996. "A Schumpeterian Model of Protection and Relative Wages," Working Paper Series, Research Institute of Industrial Economics 471, Research Institute of Industrial Economics.
  9. Keith E. Maskus, 1993. "Intellectual property rights and the Uruguay Round," Economic Review, Federal Reserve Bank of Kansas City, issue Q I, pages 10-25.
  10. Paul S. Segerstrom, 2007. "Intel Economics," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 48(1), pages 247-280, 02.
  11. Grossman, Gene M & Helpman, Elhanan, 1991. "Endogenous Product Cycles," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 101(408), pages 1214-29, September.
  12. Gene M. Grossman & Elhanan Helpman, 1989. "Quality Ladders and Product Cycles," NBER Working Papers 3201, National Bureau of Economic Research, Inc.
  13. Segerstrom, Paul S, 1998. "Endogenous Growth without Scale Effects," American Economic Review, American Economic Association, American Economic Association, vol. 88(5), pages 1290-1310, December.
  14. Pritchett, Lant, 1995. "Divergence, big time," Policy Research Working Paper Series 1522, The World Bank.
  15. Wacziarg, Romain & Welch, Karen Horn, 2003. "Trade Liberalization and Growth: New Evidence," Research Papers, Stanford University, Graduate School of Business 1826, Stanford University, Graduate School of Business.
  16. Peter Howitt, 1999. "Steady Endogenous Growth with Population and R & D Inputs Growing," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 107(4), pages 715-730, August.
  17. Charles I. Jones, 1997. "On the Evolution of the World Income Distribution," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 11(3), pages 19-36, Summer.
  18. Chol-Won Li, 2003. "Endogenous Growth Without Scale Effects: Comment," American Economic Review, American Economic Association, American Economic Association, vol. 93(3), pages 1009-1017, June.
  19. Gino A.Gancia, 2003. "Globalization, Divergence and Stagnation," Development Working Papers 174, Centro Studi Luca d\'Agliano, University of Milano.
  20. Francisco Rodriguez & Dani Rodrik, 2001. "Trade Policy and Economic Growth: A Skeptic's Guide to the Cross-National Evidence," NBER Chapters, in: NBER Macroeconomics Annual 2000, Volume 15, pages 261-338 National Bureau of Economic Research, Inc.
  21. Yang, Guifang & Maskus, Keith E., 2001. "Intellectual property rights, licensing, and innovation in an endogenous product-cycle model," Journal of International Economics, Elsevier, Elsevier, vol. 53(1), pages 169-187, February.
  22. Dinopoulos, Elias & Thompson, Peter, 1998. " Schumpeterian Growth without Scale Effects," Journal of Economic Growth, Springer, Springer, vol. 3(4), pages 313-35, December.
  23. Glass, Amy Jocelyn & Saggi, Kamal, 2002. "Intellectual property rights and foreign direct investment," Journal of International Economics, Elsevier, Elsevier, vol. 56(2), pages 387-410, March.
  24. Lai, Edwin L. -C., 1998. "International intellectual property rights protection and the rate of product innovation," Journal of Development Economics, Elsevier, Elsevier, vol. 55(1), pages 133-153, February.
  25. Anonymous, 1997. "Research Updates," Journal of Food Distribution Research, Food Distribution Research Society, Food Distribution Research Society, vol. 28(1), February.
  26. Horowitz, Andrew W & Lai, Edwin L-C, 1996. "Patent Length and the Rate of Innovation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 37(4), pages 785-801, November.
  27. Segerstrom, Paul S & Anant, T C A & Dinopoulos, Elias, 1990. "A Schumpeterian Model of the Product Life Cycle," American Economic Review, American Economic Association, American Economic Association, vol. 80(5), pages 1077-91, December.
  28. Hans Jarle Kind, 2004. "Consequences of Imitation by Poor Countries on International Wage Inequalities and Global Growth," Review of Development Economics, Wiley Blackwell, Wiley Blackwell, vol. 8(1), pages 47-67, 02.
  29. Samuel S. Kortum, 1997. "Research, Patenting, and Technological Change," Econometrica, Econometric Society, Econometric Society, vol. 65(6), pages 1389-1420, November.
  30. repec:ebl:ecbull:v:15:y:2003:i:4:p:1-8 is not listed on IDEAS
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